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I have observed the following issue.
A report that has a live connection to another Power BI Dataset in the service can successfully be published AND a public weblink generated.
However, if you switch the connection mode to Direct Connection to that Power BI Dataset the public Url will not generate. The option still exists. However, when you click the button to generate the code nothing actually happens. It just flashes for a second and then acts like you did not hit the button.
How to reproduce
1. Create a report in Power BI Desktop and connect it to a Power BI Dataset
2. Publish Report to BI Service.
3. Test to make sure you can actually publish a public URL.
4. Switch report model to direct query
5. Optional: Remove published report and public URL from Service.
6. publish the report a Power BI service
7. You will no longer be able to create a public URL
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Have submited this issue internal to confirm(ICM: 278256018), would update here as soon as possible if there is any progress about this issue.
In addition, another point in this issue still needs to be investigated:
1. Create a report in Power BI Desktop and connect it to a Power BI Dataset
2. Publish Report to BI Service.
3. Test to make sure you can actually publish a public URL.
See this limitation in the document:
Publish to web is supported for the vast majority of data sources and reports in the Power BI service. However, the following kinds of reports aren't currently supported or available with Publish to web:
Looks like the report itself using Live connection mode should not be published to web in Power BI Service by design but actually it does not and I have reproduced it as your mentioned.
Best Regards,
Community Support Team _ Yingjie Li